Buying off-the-plan—purchasing a property before it’s completed—has become a popular strategy in Australia for first-home buyers and investors alike. But while it can offer benefits like stamp duty savings and price locking, one of the most important and often misunderstood aspects is the valuation process.
This article explains how off-the-plan property valuation works in Australia, why it can differ from your contract price, and what you need to know to protect your deposit and secure finance.
What Is an Off-the-Plan Property?
An off-the-plan property is a unit, apartment, townhouse, or house-and-land package purchased based on plans and specifications—before construction is finished or sometimes even started.
Buyers enter into a contract of sale with a fixed price, but the property’s value at settlement may differ due to changing market conditions or perceived risks.
Why Is Off-the-Plan Valuation Important?
Most buyers rely on bank finance to complete their purchase. The bank will:
- Order a valuation before settlement
- Use the valuer’s estimate (not your contract price) to determine the loan amount
- Base your loan-to-value ratio (LVR) on the valuer’s opinion
If the valuation comes in lower than your purchase price, you may need to contribute extra funds to cover the shortfall—or risk losing your deposit.
When Does Valuation Happen?
Valuation typically occurs just before settlement, once the property is built and the developer is ready to hand it over.
This can be 12–36 months after contract signing, meaning market conditions could shift significantly in that time.
How Is an Off-the-Plan Property Valued?
A Certified Practising Valuer (CPV) assesses the completed property, comparing it to:
- Recent sales of similar built apartments or homes in the same area
- Specifications in the contract and inclusions list
- Location, views, layout, finishes, and floor level
- Risks related to the developer, building quality, and buyer demand
If the market has softened, there is oversupply, or the development is seen as high-risk, the valuer may issue a conservative valuation.
Risks of a Lower Valuation (Valuation Shortfall)
If your property is valued below the contract price, your lender may reduce the loan amount. This creates a valuation shortfall, requiring you to:
- Pay the gap out of pocket
- Negotiate with the developer for a price adjustment (not common)
- Withdraw from the contract, which may cost you your deposit
For example:
- Contract price: $700,000
- Valuation: $650,000
- Lender offers 80% LVR on $650,000 = $520,000
- You must now contribute $180,000 (instead of $140,000)
How to Minimise Valuation Risk
- Buy in established suburbs with proven market demand
- Avoid high-density developments in oversupplied areas
- Research the developer’s track record and quality
- Get advice on resale value and rental yield
- Speak to a mortgage broker about valuation contingencies
- Budget for a potential valuation gap before settlement
Can You Get a Valuation Before Completion?
Yes. You can request a pre-completion valuation, but it will be conditional on the building being finished as per plans. Lenders may still request a final valuation at settlement.
Some buyers also engage an independent valuer early to assess whether the contract price is fair, helping to make a more informed purchase.
What Happens If the Valuation Matches or Exceeds the Purchase Price?
- You can proceed to settlement as planned
- Your LVR and deposit remain as originally calculated
- You have a stronger equity position and may even renegotiate better loan terms
Cost of Off-the-Plan Valuation in Australia
| Property Type | Estimated Valuation Fee |
| Standard off-the-plan unit | $400 – $700 |
| High-end apartment | $600 – $1,000+ |
| House-and-land package | $500 – $900 |
Lenders typically appoint the valuer, but buyers can arrange their own independent valuation for peace of mind.
Conclusion
Off-the-plan property valuation is a crucial step in finalising your purchase—and can carry serious financial implications. By understanding how valuations work and preparing for possible shortfalls, you can navigate the process confidently and protect your investment.
Always work with a qualified mortgage broker, conveyancer, and consider obtaining your own valuation to verify the price and reduce settlement risk.
